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Academic Study: eBay Sellers Shirk Sales Tax Law


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Economists’ findings come as states and Congress look for new ways to collect tax on Internet sales. Sales tax collection compliance among eBay sellers is “alarmingly low,” says a new academic study published as states look for ammunition to bolster tax-collection laws.

When Georgia State University Economics Professor James Alm and Mikhail I. Melnik, an assistant professor of economics at Niagara University, downloaded and analyzed data on all consumer electronics sold on eBay ( EBAY – news – people ) during a 24-hour-period in July 2007, they found that only 18% of sellers bothered to collect sales tax even on sales to buyers within their own states. Under current federal law, an online seller has to collect sales taxes on purchases by buyers in his home state, but not on those by buyers from other states in which he has no physical presence, or “nexus.” States generally exempt residents who aren’t in business and make only “occasional” sales–say at a garage sale–from this requirement.

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